Light Volume Weakness...

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Stock Market Trends:

- ETF Positions indicated as Green are Long
ETF positions and those indicated as Red are
short positions.

- The State of the stock market is used to determine how you should trade.
A trending market can ignore support and resistance levels and maintain its
direction longer than most traders think it will.

- The BIAS is used to determine how aggressive or defensive you should be
with an ETF position. If the BIAS is Bullish but the stock market is in a Trading
state, you might enter a short trade to take advantage of a reversal off of
resistance. The BIAS tells you to exit that ETF trade on "weaker" signals than
you might otherwise trade on as the stock market is predisposed to move in
the direction of BIAS.

- At Risk is generally neutral represented by "-". When it is "Bullish" or "Bearish" it
warns of a potential change in the BIAS.

- The Moving Averages are noted as they are important signposts used by the
Chartists community in determining the relative health of the markets.

Best ETFs to buy now (current positions):

Long DIA at $161.48 as of December 19, 2013
Long SPY at $181.19 as of December 19, 2013

Value Portfolio:

Long SDRL at $33.90 on June 15, 2012 (Shares were put to us when options expired.
We were paid $1.10 per share when we sold those options and bought shares for
$35.00 each.) We have collected dividends: June 10, 2014 $1.00, March 5, 2014
$0.98, December 3, 2013 $0.95, September 5, 2013 $0.91, June 5, 2013 $0.88,
$1.70 Dec 4, 2012, $0.84 Sep 4, 2012. Total = $6.28 in dividend payments.
Short FXE at $124.19 on August 24, 2012
Long UUP at $22.43 on August 24, 2012
Short FXE at $134.48 on October 4, 2013
Long SDRL at $35.43 on Feb 18, 2014
Long SDRL at $33.50 on March 21, 2014 (Shares were put to us when options expired.
We were paid $1.50 per share when we sold those options and bought the shares
for $35.00 each.) We have collected dividends: June 10, 2014 $1.00.

A gap down open was followed by a bit more selling on light trading volume
to leave the Dow closing below its 20-Day Moving Average (DMA) but the NASDAQ-100
and S&P-500 closed above their respective 20-DMAs. All three closed above
their 50- and 200-DMAs with fractional losses across the board. All three are
in trading states, with a BULLISH BIAS. The weakest performer of the day was
the Semiconductor Index (SOX 616.65 -12.48) which closed below its 20-
and 50-DMAs. The Dow Jones Transports (IYT 150.77 -0.63) closed fractionally
lower and is the only equity indexes we regularly report on that is in an uptrend
state. The Finance Sector ETF (XLF 22.89 -0.13) closed fractionally
lower. The three canaries were a mixed bag: the Russell-2000 (IWM 113.60
-1.04) lost nearly one percent while the Bank Index (KBE 32.71 +0.03)
and the Regional Bank Index (KRE 39.12 +0.03) both added modest gains.
This left the Russell-2000 closing even with its 200-DMA and the Bank Index
closing even with its 50-DMA. All three closed below their 20-DMAs, with the
Regional Bank Index and the Russell-2000 below their 50-DMAs. All three maintain
a BEARISH BIAS and all three are now in trading states. Longer Term Bonds (TLT
115.67 +1.35) added more than one percent breaking out to a new closing high
not since May of 2013. It shifted back into an uptrend state and maintains
a BULLISH BIAS and is above its 20-, 50-, and 200-DMAs. Trading volume remained
light with 527M shares traded on the NYSE. Trading volume on the NASDAQ
fell to a light 1.684B shares traded.

Apple (AAPL 97.67 +0.64) moved counter to the broader market rising
fractionally. AAPL constitutes about 20 percent of the NASDAQ-100 and nearly
five percent of the S&P-500.

Seadrill Limited (SDRL 37.49 -0.05) fell modestly. Below, support lies
at $37.41 while the next target above remains $40.96, it's closing price on
the last trading day of 2013. It is in an trading state. We sold March 2014
$35.00 put contracts for $150 at the open on Feb 18th, 2014 and bought shares
at $35.43. The stock is now trading ex-dividend for $0.98 and one dollar for
total dividends issued of $1.98. The shares were put to us at $35.00 less
the $1.50 per share we were paid for the puts, so we have an effective price
of $33.50.

The U.S. dollar rose two tenths to a level not seen since February. The Euro
fell two tenths of one percent closing at a level not seen since early November
last year. The dollar broke out above the 200-DMA early in the week and continued
to rise modestly each day since. The Euro broke below its 200-DMA in May, and,
other than a single day in June, has been unable to move back above that important
level. It appears that the longer term trend may be changing.

The yield for the 10-year treasuries fell four basis points to close at 2.47.
The price of a barrel of crude oil closed flat (up two cents) to close at $102.09.

Market internals were bearish. Decliners led advancers 2:1 on both the NYSE
and the NASDAQ. Down volume led up volume 2:1 on the NYSE and by nearly that
ratio on the NASDAQ. The index put/call ratio fell -0.09 to close at 1.49.
The equity put/call ratio rose +0.04 to close at 0.62.

Conclusion/Commentary

We saw a day of weakness which may prove to be the pause that refreshes. For
now, we will maintain our long positions but not add to them. We are anxious
to see if the bank indexes can continue to show recent strength. Stay tuned.

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